Allowing taxman to raid accounts would violate 'a fundamental tenet of English
law and democratic society', accountancy chief tells MPs

Proposed new powers that will allow HM Revenue & Customs (HMRC) to dip into individuals' bank accounts to reclaim money owed to the Exchequer have faced fresh criticism.

The Treasury select committee heard that the new powers, contained in the detail of last month's Budget, were "excessive" and potentially illegal.

In a written submission to MPs, Frank Haskew, head of the tax faculty at the Institute of Chartered Accountants in England & Wales (ICAEW), said the plans were "of considerable concern to many taxpayers and accountants". He said it was "a fundamental tenet of our English law and our democratic society" that money "cannot be grabbed from somebody’s account without a judge agreeing to the move".

The change is due to be made in 12 months' time following a consultation process and is forecast to raise an additional £65m in tax revenue, rising to just over £100m the following year.

Following his appearance before the committee, Mr Haskew raised further concerns that - given HMRC's track record - it could target the wrong people. "How up to date are HMRC's databases?" he asked. "ICAEW has seen numerous cases recently of HMRC chasing debts which are not due, including attempting to confiscate assets.

"What steps will be put in place to ensure funds that are not due are not seized?"

He added: "We believe it is imperative that there are proper safeguards, and there should be proper judicial oversight of any decisions made, with rights of appeal."

The taxman will have the power to take money from a bank account if the account holder has been asked for the money three times and only if it would leave them with at least £5,000 across all their accounts.

At present, tax officials must apply to a magistrates court or the County Court to recoup money.

Andrew Tyrie, chairman of the committee, has said the issue had "concerned" its members.

Patrick Stevens, tax policy director at the Chartered Institute of Taxation, also appeared in front of MPs. He said: "The concern that we certainly have is that however many safeguards there are on the ability to simply take money from somebody’s bank account, it does rely on the authority having worked out how much money should correctly be taken from it in the first place.

"It may mean over a period of time particularly more vulnerable people – people who are not wealthy, high earners – may become subject to this."

HMRC collected tax revenues of £470bn last year but estimates that £35bn a year of money owed is unpaid.